Sunk cost and policy of government Regulation

This paper is to investigate the industrial organization theory in terms of sunk costs,we found the sunk cost and market structure.Hence we make use of the sunk cost effect to take into account market structure and market failure,and we found that sunk costs lead to imperfect goods market and gain extranormal profit resulting from sunk costs.These resource and factor market imperfectnesses open up profit opportunities for a corporate transforming resource into products leading to the failure to free entry and exit.Hence it is neccesary to government regualtion.